By Catriona Lingwood, Chief Executive of Constructing Excellence in the North East

Prompt payment, or the lack of it, is such a big issue in our industry and it has repercussions that not everybody is aware of. Not only does it cause economic and social damage, but it has really tarnished the reputation of the industry, and it’s about time that changed.

Finance is a huge problem for our industry and a one I don’t think we’ve taken seriously enough in the past. In everyday life you pay for things immediately, whether that be goods or services, and you wouldn’t dream of asking to delay the payment or paying less than what was due, so why should our industry be any different?

Prompt payment, more often referred to as late payments since it’s becoming more of a rarity that they are ever prompt, is everyone paying what they are due as soon as it is due, or earlier.

Earlier this year, Constructing Excellence held a members’ forum discussing the subject of payment. Industry professionals from contractors to suppliers, shared their opinions and shed light from all perspectives, on how late payments affect their work. The outcome of the session was that good practice needs to be carried out throughout the project, whether it be with the client or the contractor, and everyone should pay on time to help the project run smoothly- no surprises there then.

With the rest of the industry digitising, integrating collaborative design and construction processes, and with the new Building Information Model (BIM) mandate going live earlier this month, it surprises me that the way we pay our bills is yet to catch up. For everything else, payment is now automated, we can complete transactions easily via apps, or Paypal, so automatically paying bills online once work is verified and complete could be the answer to all of our problems. It just doesn’t make sense that when it comes to making a payment we are so out-dated, but we have robots capable of building houses.

In a bid to encourage prompt payment, many subcontractors have inflated their tender prices to cover the costs they incur when their customers pay late. Textura found that on average, four per cent is added to costs to cover late payment, but subcontractors did say that they would discount prices by an average of 2.35 per cent if contractors paid promptly – within 30 days.

During the forum, when asked why it was necessary to delay payments, the answers included; project defects, no cash and a simple ‘because I can’, showing that most of the inefficiencies could be resolved by better industry attitudes and behaviours.

Thankfully, the case for prompt payment was particularly strong, with people understanding why prompt payment was so essential. Resolving the current issues could potentially deliver immediate financial benefits to projects and companies, improving the industry as a whole. If more businesses practice prompt payment, the reputation of the industry will sharp change to one that is trusting, capable of collaborative working and most importantly, ethical!

The shortlist for this year’s Constructing Excellence North East Awards, celebrating the excellent projects and amazing people of the North East construction industry, has been revealed.

The awards, which are a significant event in the North East’s built environment calendar, recognise individuals and companies alike and will this year take place on Friday June 10 at Newcastle Gosforth Marriot Hotel.

This year there are 12 awards up for grabs, including integration and collaborative working, leadership and people development, sustainability, SME of the year, innovation, value and project of the year.

Catriona Lingwood, Chief Executive of Constructing Excellence in the North East, said: “Our awards celebrate the achievements from the North East construction industry and every year we are impressed with the standard of entries and this year is no exception.”

Over the last 12 years, the awards have grown significantly with over 500 people regularly turning out to witness the best of the region’s construction industry being recognised for their efforts.

Ian Storer, Director of Corepeople Recruitment, headline sponsor of the awards for a sixth consecutive year, said: “These awards have built up a reputation as the North East’s premier construction event and I am delighted to be involved with the judging panel. It is great to see that the projects and nominations which have been shortlisted are of a high calibre and I am sure the judges will have a tough time deciding on the winners”

The winner of each category will go on to compete in the national Constructing Excellence Awards, held in London on Friday November 4 at the London Marriott Grosvenor Square.

Tickets for the awards are still available and can be bought as individual places or tables of ten. To book please contact Leanne McAngus on 0191 5007880 or email leanne@cene.org.uk

By Catriona Lingwood, Chief Executive of Constructing Excellence in the North East

There’s been a lot of talk about growth or lack of it, in the industry, but recent survey results show that we are growing, just not at the speed we might have hoped for. Survey results from Markit Economics and the Chartered Institute of Procurement & Supply (CIPS) survey shows that the industry is expanding at a steady pace.

Now, it might be growing at its slowest pace for more than two years but the industry is striving, and that’s all we can ask of it. Analysts did predict a slight decline for March, but the industry has proved them wrong and held steady.
If the industry keeps performing the way it is, we’re headed for three full years of growth, showing that we’ve gone from strength to strength each year since the recession.

The pace of expansion was slow throughout March, with less job creation and subcontractor usage dropping two months in a row, but the point is it is still expanding, and we must focus on that. The Markit/CIPS UK construction purchasing managers’ index (PMI) stood at 54.2 last month, which although it hasn’t changed since February, it is slightly better than what analysts expected and higher than the neutral 50.0 value, as it has been now for the 35th consecutive month.

Increases in commercial work and engineering activity were both counterbalanced by a slowdown in residential building, as the latest increase in housing activity was only marginal and the weakest recorded since January 2013. Although it is disappointing to see house building growth almost come to a halt given the government’s plans for new houses, it’s not all doom and gloom, a marginal increase is still an increase!

51per cent of survey respondents did expect a rise in business activity over the next 12 months,with only 11 per cent forecasting a reduction, showing that companies do remain optimistic about their potential growth.

The industry is going to go through slow growth periods, but optimism and confidence will see us through difficult times, what’s important is that we never lose faith or give up on companies and the industry as a whole, so it’s amazing to see that over half of survey respondents were optimistic about their future.

As well as general unpredictability, the forthcoming EU referendum is, as expected, weighing on the minds of business leaders. The uncertainty of Brexit provides us with potential short term and long term impacts, but until a decision and negotiations are made, we can’t prepare for such outcomes. Hopefully we’ll be in a better position in a few months’ time and can plan for the future with confidence.
One thing to take from the survey results is the fact that PMI has remained steady against all odds, demonstrating a strong resilience in the industry and a strong foundation from which to keep building, so let’s do just that!

By Catriona Lingwood, Chief Executive of Constructing Excellence in the North East

No matter what industry you work in, there are always disputes, and our industry is no different.
The results of the third National BIM Survey (NBS) survey into construction contracts and related legal issues has cemented what we already knew- disputes are a part of our everyday working life.
Respondents included members of more than 20 industry bodies, who shared their legal and contractual experience of the last 12 months to provide an overarching view of the construction industry.
So, although disputes are consistent, the reason for such is ever changing. During the recession and tougher times the lack of work and low-value contracts only being made profitable through disputes was to blame, which is more than understandable, but now that construction output is stronger than ever, disputes don’t seem to be going away.
When asked in 2012, 90 per cent of respondents thought the number of disputes had increased or stayed the same as the last time they were asked, and four years later, the figure remains the same.
Almost half of those who responded to the survey said they had to deal with at least one dispute last year, with most (76 per cent) disputes occurring between clients and main contractors or between the main contractor and subcontractor (29 per cent). Although the severity of the dispute isn’t mentioned, disputes whether large or small have the potential to ruin relationships and disrupt projects.
I know sometimes you can’t avoid a dispute, but there are ways of reducing the severity or solving the issue, and surprisingly, the results actually gave us some promising news! 62 per cent of respondents had been involved in collaborative working in the last year, with 81 per cent believing it helped with information sharing and therefore reducing the number of disputes.
The main cause of arguments in the recent survey was found to be over the value of final accounts and the extension of time on projects – both of which could easily be resolved through collaborative working. Believe it or not, some simple communication can solve a lot of our problems.
Building Information Modelling (BIM) was introduced to address one of the major barriers to collaborative working – the lack of clear definition of responsibilities. The report suggests that the legal framework needs to evolve to recognise and accommodate the changes BIM has brought. As of November last year, only 14 per cent of those taking part in the survey had BIM fully integrated into contracts, which has hopefully dramatically increased given that the Level 2 BIM mandate goes live from Monday.
NBS has previously conducted this survey across many years, when economic climate was very different on each occasion, yet the resulting themes remain the same: the need for collaboration, the damaging effect of disputes and the often adversarial character of construction. So, although we’ve come on leaps and bounds in many aspects, there’s still a lot of work to be done to reduce disputes, and I strongly believe focusing on collaborative working is a strong place to start.

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